local government report for 2009

8/14/2019 Local Government Report for 2009

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FIRST REPORT OF THE COMMITTEE ON LOCAL GOVERNANCE, HOUSING AND

CHIEFS AFFAIRS FOR THE FOURTH SESSION OF THE TENTH NATIONAL

ASSEMBLY APPOINTED ON 23 SEPTEMBER, 2009

Consisting of:

Mrs R M Musokotwane, MP, (Chairperson); Dr K Kalumba, MP; Major R M Chizhyuka, MP;Mr H M Malama, MP; Mr D Mwango, MP; Mr E M Singombe, MP; Mr V M Mooya, MP; and

Mr J Shakafuswa, MP.

The Honourable Mr Speaker

National Assembly

Parliament BuildingsLUSAKA

Sir, following the guidance that your Committee should table the Report of your previous

Committee for the Third Session of the Tenth National Assembly, your Committee studied theReport in detail on 11 November, 2009

Your Committee, Mr Speaker, now have the honour to present the Report.

R M Musokotwane, MP November, 2009

CHAIRPERSON LUSAKA


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REPORT OF THE COMMITTEE ON LOCAL GOVERNANCE, HOUSING AND

CHIEFS AFFAIRS FOR THE THIRD SESSION OF THE TENTH NATIONAL

ASSEMBLY APPOINTED ON 21 JANUARY, 2009

Consisting of:

Mr J J Mwiimbu, MP (Chairperson); Mrs R M Musokotwane, MP; Mr H M Malama, MP; Mr GMpombo, MP; Mr K Kakusa, MP; Mr D Mwango, MP; Mr C Kambwili, MP; and Mr E M

Singombe, MP.

The Honourable Mr Speaker

National Assembly

Parliament Buildings

LUSAKA

Sir, your Committee have the honour to present their Report for 2009.

Functions of the Committee

2. In accordance with the National Assembly Standing Orders, the functions of the

Committee are to:

(i) study, report and make recommendations to the Government through the House on themandate, management and operations of the Ministry of Local Government and Housing,

departments and/or agencies under its portfolio;

(ii) carry out detailed scrutiny of certain activities being undertaken by the Ministry of LocalGovernment and Housing, departments and/or agencies under its portfolio and make

appropriate recommendations to the House for ultimate consideration by the

Government;

(iii) consider any Bills that may be referred to the Committee by the House; and make, ifnecessary, recommendations to the Government on the need to review certain policiesand/or certain existing legislation; and

(iv) consider in detail the annual reports and any other reports of the Ministry of LocalGovernment and Housing, its departments and/or agencies under its portfolio.

Meetings of the Committee

3. Your Committee held twenty five (25) meetings to conduct business for the year.

Procedure adopted by the Committee

4. During the period under review, your Committee considered the Report of the Minister ofLocal Government and Housing for the year 2009. Your Committee also considered the Action-


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Taken Report on your previous Committees Report for the Third Session of the Tenth National

Assembly. Principal Officers from the local authorities mentioned in the Ministers Report wereinvited to appear before your Committee at meetings held at Parliament Buildings. Your

Committee also received submissions from stakeholders on topical issues that were underconsideration, namely: 1) the establishment and management of cemeteries in Zambia; and 2) the

management of public parking spaces in Lusaka.

Further, your Committee received an update on the Decentralisation policy from the Secretary to

the Cabinet after which they undertook a five day foreign tour to Uganda to share experiences onthe subject.

PART I

CONSIDERATION OF THE 2009 REPORT OF THE HONOURABLE MINISTER OF

LOCAL GOVERNMENT AND HOUSING ON THE SUMMARISED AUDITEDACCOUNTS OF LOCAL AUTHORITIES

MANSA MUNICIPAL COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)for the period 1 January, 2006 to 31 December, 2006

Over expenditure on Capital Projects: Completion of Civic Hotel: K348,882,999

5. The assessment of receipts and payment accounts revealed an over expenditure on the

Civic Hotel project of K276,309,999. The budget provision was K72, 573,000 against the actualexpenditure of K348, 882,999 which was contrary to Regulation 9 of the Local Authorities(Financial) Regulations No. 125 of 1992.

In reply, the Town Clerk informed your Committee that the Council had prepared supplementary

estimates that had been submitted to the Ministry of Local Government and Housing for

approval.

In noting the submission, your Committee resolve to await the Ministers response on the matter.

LUANSHYA MUNICIPAL COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)

for the period ended 31 December, 2006

Unaccountable for Funds: K487, 539,291

6. The Council did not account for funds by way of providing receipts, acquittal sheets orother relevant documents to justify the use of funds contrary to Regulation 12 (f) of the Local

Authorities (Financial) Regulations No.125 of 1992.

In reply, the Town Clerk reported that the Council had provided acquittal sheets and other

relevant documents totalling K308,494,493 which had since been verified by the Ministry of


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Local Government and Housing.

Your Committee advise the Town Clerk to observe financial regulations strictly in his Councils

handling of public funds. They direct that the remaining supporting documents be found withoutfail.

SOLWEZI MUNICIPAL COUNCIL


for the Period 1 January, 2006 to 31 December, 2006

Missing Audit Document

7. It was discovered that forty-eight (48) receipt books were issued during the period

under review to revenue collectors and collection centers but were not returned to the strongroom for safe custody for external audit contrary to Regulation 28 (1) (b) of the Local

Authorities (Financial) Regulation No. 125 of 1992.

In reply, the Town Clerk submitted to your Committee that a search for the documents in

question had revealed that three (3) books were returned but were not signed for in theregister. This was as a result of negligence on the part of the officer who was in charge of

the issuance of the accountable documents. However, this had been addressed and the

issuing officer had since been dismissed from the service of the Council due to grossnegligence of duty.

Your Committee note that only three (3) of the missing forty eight (48) missing receipt

books have been located by the Council leaving a balance of forty five (45) still to be found.Your Committee deplore this situation as it is a clear indication that the Town Clerk has littlecontrol over his accounting staff. They direct the Town Clerk to ensure that all the receipt

books are found without further delay.

Over Expenditure: K341,106,455

8. An examination of the 2006 budget performance revealed that a total sum of

K341,106,455 was overspent by the Council contrary to section 39(2) of the Local GovernmentAct Cap 281 of the Laws of Zambia read together with the Local Authorities (Financial)

Regulation Number 10(1) as contained in Statutory Instrument No. 125 of 1992.

In reply, the Town Clerk informed your Committee that the Council had over spent on somevotes which led to the under-estimation in the 2006 General Rate Fund.

Your Committee direct the Town Clerk to prepare supplementary estimates and have them

considered for approval by the Ministry of Local Government and Housing. They await a report

on the matter.

Payment Made Without Supporting Documents: K221,115,738

9. An examination of records revealed that sixty-seven (67) payment vouchers amounting to

K221,115,738 were not adequately supported with relevant documents contrary to Regulation 86

(1) of the Local Authorities (Financial) Regulation No. 125 of 1992.


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In reply, the Town Clerk informed your Committee that the computations of the terminal benefits

were not attached to the payment vouchers but were on the personal files of each retiree.

However, from the auditors verification report, your Committee noted that out of the sixty seven(67) payments without supporting documents, only thirteen (13) totaling K73,500,000 had their

supporting documents availed. The remaining fifty four (54) totaling K147,615,738 remainedunsupported.

Your Committee direct the Town Clerk to find the remaining supporting documents and reportprogress to them.

Council Funds used on Electoral Commission of Zambia (ECZ) activities: K3, 400,000

10. An examination of payment vouchers revealed that the Council used K3, 400,000 on

activities of the Electoral Commission of Zambia. There was no evidence of refund by the

Commission to the Council.

In reply, the Town Clerk explained that the Council had used K3, 400,000 on an ECZ programme

and expected to recover the same from the anticipated savings from the by-election to be held inAugust 2009.

Your Committee deplore the Town Clerks attitude towards the recovery of the money. They

direct the Town Clerk to be more aggressive in his approach by engaging the Electoral

Commission of Zambia on the matter instead of relying on savings from another election. Theywish to be updated on the issue.

Unaccounted for Cash Drawings: K16, 813,600

11. It was discovered that some officers were drawing cash for payment to various payees.However, a check revealed that a sum of K16, 813,600 was not accounted for.

Your Committee were informed by the Town Clerk that the attachments on the six (6) vouchers

were misplaced due to poor filling on the part of the cashiers as could be seen from the torn

payments vouchers. This situation has since been normalised. However, the cashier involved

was on the run and the matter was under investigation by the Police.

Your Committee resolve to await the outcome of the Police investigation.

Payments Made For Unspecified Purposes: K31, 381,000

12. It was discovered that payments totaling K31, 381,000 were paid without specifying

the purposes for which the Council made the payments contrary to Regulation 79 of the Local

Authorities (Financial) Regulations No. 125 of 1992.

The Town Clerk explained that the findings of the Auditor were correct as the cashier involved

used to draw funds for payment of various Council needs. The cashier committed severaloffences which resulted in management reporting him to the Police and he was on the run.

Unfortunately, the said cashier had no arrears thus making it difficult for the Council to make

recoveries from him. Your Committee further heard that the sum of K30,781,000 was paid to the

former Town Clerk who had since been dismissed from the Council. Your Committee also heard

that a total sum of K600,000 for spares for the repair of a vehicle was paid to a driver. However,


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the items were bought from an unrecognised dealer and this made it difficult to prove whether the

items were bought. The same had been recovered from the drivers unpaid salaries.

Your Committee urge the Council to continue pursuing the recovery of all the monies and reportback accordingly.

Non Maintenance of Assets Register

13. An examination of the register of assets during the period under review revealed that theCouncil only maintained a listing of assets and inventory without a detailed register of assets

contrary to Regulation 25 (e) of the Local Authorities (Financial) Regulation No. 125 of 1992

The Town Clerk reported that a fixed asset register was in place even at the time of audit.

However, as stated by the Auditor, the Council had no record of details such as date of

acquisition of assets, cost price and the rate of depreciation. This made it difficult to adequately

maintain a fixed asset register with the required details.

In noting the submission, your Committee direct the Town Clerk to follow the Auditors advice

and maintain the said register as prescribed in the Finance manual. Your Committee direct theMinistry of Local Government and Housing to supervise the Council closely to ensure that they

maintain the registers in questions as required.

Payments made from Cash before Banking: K2, 590,000

14. It was revealed that a sum of K2,590,000 was spent by the Council before banking

contrary to Regulation 19 of the Local Authorities (Financial) Regulation No. 12 of 1992.

In reply, the Town Clerk reported that the Council had noted the Auditors recommendation andthe situation had since been corrected.

In order to satisfy themselves that the practice has been discontinued by the Council, your

Committee direct the Ministry to carry out a further verification on the matter and report back

accordingly.

PETAUKE DISTRICT COUNCIL


for the period 1 January, 2006 to 31 December, 2006

Irregular Credit Sales to Council management from the motel bar: K20,534,300

15. It was revealed that management staff was getting beer and drinks on credit almost on a

daily basis. The bar operated like a social club and yet it was a commercial venture.

The Council Secretary submitted to your Committee that the correct amount of credit sales wasK20,501,300 and not K20,534,300 as reported in the Ministers report. Further, out of the

K20,434,300 credit sales, only K2,811,500 were for Council staff while the balance of

K17,689,800 were credit sales to other clients. A total of K12, 215,500 had been paid back

leaving a balance of K8, 288,000.


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In noting the submission, your Committee direct the Council Secretary to abide by the Auditors

advice to manage the motel as a commercial venture to avoid possible losses of funds. Theyfurther direct the Council Secretary to ensure that the balance of K8, 288,000 is recovered, at

once.

CHIBOMBO DISTRICT COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)for the period 1 January, 2006 to 31 December, 2006

Payment of Imprest to Officer with Outstanding Imprest K87, 251,463

16. It was revealed that the Council had paid imprests of K 87,251,463 to officers with

outstanding imprests in their names contrary to Regulation 119 of the Local Authorities

(Financial Regulations No 125 of 1992.

In response, the Acting Council Secretary submitted to your Committee that deductions for

unretired imprests in question were being effected from the salaries and wages of all affectedofficers and the sum of K 81,606,709.66 had so far been recovered leaving a balance of K

5,644,753.34 still to be recovered.

Your Committee are concerned by the failure by the Council Secretary to recover all the

outstanding imprest and direct him to recover the outstanding sum of K 5,644,753.34 at once.

Over Expenditure on other expenses: K657, 717,176.12

17. It was noted that the budgeted expenses line, Other Expenses, had been overspent withoutcausing a supplementary budget contrary to Regulation 10 of the Local Authorities (Financial)Regulations No 125 of 1992.

In response, the Acting Council Secretary submitted to your Committee that the Other Expenses

Vote was overspent because the Council had at the time received a grant of K125, 000,000 which

money was specifically meant to pay retirees who were budgeted for under the same vote (Other

Expenses). However, before receipt of the said money, the Council had started paying the

retirees using its own resources such that when the grant from the Ministry of Local Governmentand Housing was received, it increased the expenditure since the said grant could not be diverted

to other uses. Included in the over expended figure was an amount of K31,000,000 which was

used as a top up on the procurement of a Council minibus. The Council had however prepared a

virement in order to normalise this over expenditure.

Your Committee wish to satisfy themselves that the over expenditure has been normalised as

required by financial regulations. They await a report.


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MKUSHI DISTRICT COUNCIL


for the Period 1 January, 2006 to 31 December, 2006

Irregular Payment of Salaries and Wages on Loose Sheet of Paper instead of a Payroll Sheet:

K140, 530,799.86

18. A review of the payment details for salaries and wages revealed that there had beenweaknesses in the payroll system. This was evidenced by the fact that salaries and wages had not

been paid on officially recognised and acceptable payroll sheets but instead were being paid on

loose sheets of paper which were usually attached to payment vouchers as proof of acquittals.

Apparently, deductions and contributions were not reflected on the same loose sheets but only the

net amount were recorded.

The Council Secretary informed your Committee that the Council had since computerised thepayroll system which automatically captured all statutory deductions and contributions

accordingly.

Your Committee consider this a very serious audit query as a lot of money is being lost through

such omissions. They, therefore, direct the Ministry of Local Government and Housing to havethe matter verified again to ensure that the payroll system is functioning properly.

Payment of Imprests to Officers with Outstanding Imprests: K106,519,650

19. A review of imprests records revealed that management had paid imprests amountingto K106,519,650 to officers with outstanding imprests in their names contrary to Regulation

115(1) of the Local Authorities (Financial) Regulations No. 125 of 1992.

In his submission, the Council Secretary informed your Committee that the imprests in question

were just misplaced at the time of the audit and had since been traced. Further, management had

written to imprest holders over the remaining amount of K21,108,800 who, unfortunately had left

the Council.

Your Committee censure the Council Secretary for poor record keeping which in most cases is

used to conceal malpractices. They direct the Council Secretary to ensure that outstandingimprests for the staff that had left the Council are recovered from their benefits without fail.

Goods for the Motel bought by Imprests rather than direct by Cheque in the Name of the

Suppliers: K57,190,800

20. It was discovered that purchases for the motel amounting to K57,190,800 had been

paid to third parties in form of imprests rather than direct by cheque in the names of suppliers

contrary to Regulation 89(1) of the Local Authorities (Financial) Regulations No. 125 of 1992.

In his response, the Council Secretary informed your Committee that while managementappreciated the Auditors advice, the hospitality industry demanded cash purchases in most cases

because of the nature of goods needed for it to operate, such as foodstuffs and other small items

whose cost would be negligible to be paid by cheques. Management had however limited the

amounts of cash purchases to K400,000 and below while large purchases were bought directly by

cheques.


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CHINSALI DISTRICT COUNCIL

Audit Inspection Report for the period 1 October, 2007 to 30 June, 2008

Utilisation of refuse Bay Grant: K42, 000, 000

24. The grant was deposited in the Chinsali District Council Development Account number

028810008008 held at Finance Bank on 3 January, 2008 and was recorded in the cash book on 7

January, 2008.

The findings are set out below.

a) The Council constructed three refuse bays at the New Market, Old Market and Bus

Station at the cost of K 24,830, 000 as per break down below:

Materials for the three refuse bays 18, 280,000Design Costs 550, 000

Construction Labour Costs 6 000, 000

Total Cost 24,830,000

However, K3,000,000 for construction labour costs was not paid as at 30 June, 2008 butwas later liquidated on 15 and 16 August, 2008 on Cheque 00001217 (K1m) and

00001216 (K2m) respectively.

b) The sum of K17,170,000 was misapplied and illegally paid to a Mr Kennedy Chishala as

settling in allowance/salary on Cheque numbers 001074 dated 03/ 01/ 2008 (K6,533,000)and 001080 dated 4 January, 2008 (K11, 533, 200) bringing the total of K18,066,200.

The seconded Principal Officer F N Nasilele approved the payments to Mr KennedyChishala. The settling in allowance was K15,720,648 as reflected on the computation

attached to the payment voucher for Cheque number 001080 dated 4 January, 2008. The

other amount K2, 345, 552 was for his salary in addition to the K6,482,103.41 paid on

Cheque 000904 on 06/11/2007.

Mr Chishala was offered temporal employment as District Treasurer through minute

number MLGH /101/ 16/ 15 dated 27 September, 2007. The Ministry paid himK10,482,103.41 which included subsistence allowance for ninety days.

The payment of settling allowance of K15,720, 648 was not applicable to Mr Chishala as

he was not appointed on permanent establishment of the Council and had already beenpaid through the Ministry.

c) The scrutiny of the computation of the salary for management, which included Mr

Kennedy Chishala during the same period revealed that the following allowances were

paid contrary to non unionised Conditions of Service of 1996:

personal to holder vehicle allowance paid to all Chief Officers at K720, 000 per monthcontrary to paragraph 204 of non-unionised Condition of Service of 1996. Only PrincipalOfficers of the District Councils were entitled to personal to holder allowance;

the Treasury Senior Staff and Council Secretary were paid 25% of basic salary as risk


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allowance, which was not enshrined in the Conditions of Service and to which they were

not entitled due to the nature of their jobs;

furniture allowance was paid at 20% of basic salary contrary to paragraph 191 (b) whichstipulated 8%. This was determined by the Council as provided for in the Conditions of

Service; and

commuted overtime allowance was paid at 30% of basic salary contrary to Conditions ofService of 1996 paragraph 208.

The allowances were paid contrary to the Conditions of Service for non-unionised employees of1996.

In reply, the Council Secretary informed your Committee that Mr K Chishala had been formally

written to asking him to pay back the monies to the Council as directed by the Auditor. The first

letter was written on 2 February, 2009 and a reminder on 11 June 2009. However, the Councilhad not received any response from him. In view of this, the Council intended to write to the

Ministry of Local Government and Housing so that the Ministry could commence recoveries ofthe K17,170,000 from his retirement benefits since he had retired. Further, all the other

allowances wrongly paid had since been recovered from the concerned officers.

Your Committee view this as a serious audit query as it has become common for many local

authorities to pay allowances that are not in accordance with conditions of service. They direct

the Council Secretary to ensure that the money that was paid wrongly is recovered. They alsodirect the Council to ensure disciplinary action is taken against the officers who misled the

Council into approving the irregular allowances. They wait for a progress report on the issues.

Utilisation of Recurrent Grant: K200,000,000

25. The Council received the sum of K200,000,000 as general grant on 20 December, 2007.

It was found that there was no expenditure, which was channeled towards direct provision ofservices. The resources which were supposed to go towards service provision were channeled to

pay back funds borrowed from Constituency Development Fund accounts (K21,000,000) and

Nkakula Rest House (K10,000,000). The scrutiny of Chinsali Finance and General Purpose

Committee minutes held on 29 November, 2007 revealed that the Council was owing

Constituency Development Fund Accounts and also approved the borrowing for operational

expenses.

In reply, the Council Secretary informed your Committee that the Council had since stopped

borrowing from the Constituency Development Fund. The funds in question had all beendisbursed to approved projects in the two constituencies, namely, Chinsali and Shiwangandu.

Your Committee wish to satisfy themselves that the Council has paid back all the amounts it owes

the Constituency Development Fund. They direct the Ministry of Local Government and

Housing to provide a report on the matter.


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CHAVUMA DISTRICT COUNCIL


for the Period 1 January to 31 December, 2006

Non Maintenance of Staff Personal Files

26. A physical check on personal files revealed that the Council did not maintain personal

staff files for thirteen (13) employees from 1998 except for six (6). Further inquiries revealed thatat the time of separation of Chavuma District Council from Zambezi District Council, members

of staff who were serving under Zambezi District Council had their files still in Chavuma.

In reply, the Council Secretary informed your Committee that at the time of audit some staff files

were still in Zambezi but had since been collected.

Your Committee note the submission by the Council Secretary but resolve to await the Auditorsverification report before the matter can be rested.

NAMWALA DISTRICT COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)for the Period 1 January, 2006 to 31 December, 2006.

Use of Cheques to post to Cash Book

27. The Council posted expenditure transactions to the cash book using information from the

cheque books instead of paid payment vouchers. As a result, payees on the payment vouchersand the cash book differed. The approach by the Council was contrary to the provision of theLocal Authorities (Financial) Regulations No. 125 of 1992.

The Council Secretary explained to your Committee that the Auditors recommendation was

noted and accounting officers were advised accordingly.

To satisfy themselves that the practice has been stopped, your Committee direct the Ministry of

Local Government and Housing to verify the current status.

Unaccounted for Cash: K25,357,345.33

28. It was discovered that substantial amounts of public funds amounting to K25,357,345.33were not all accounted for contrary to Regulation 86(1) of the Local Authorities (Financial)

Regulations No. 125 of 1992.

In reply, the Council Secretary admitted that at the time of audit most of the missing vouchers

were not in the custody of the Council because Auditors from Grant Thornton had collected some

of the files for verification of the Councils indebtedness. Further, some of the few voucherswhich were missing were just misplaced by the paying officer and efforts were made to find

them.


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However, the Ministry in their verification report to your Committee explained that the Council

had only produced supporting documents amounting to K21,273,845.33 leaving a balance ofK4,083,500 still unsupported.

Your Committee caution the Council Secretary against giving incorrect information to your

Committee. They direct the Council Secretary to ensure that supporting documents in respect ofthe balance of K4, 083,500 are found at once. Your Committee wonder what disciplinary

measures were taken against the officer who misplaced the vouchers in question.

Unacquitted Payments

29. The Council drew Cheque Number 47 for K4,251,500 as payments of allowances to

councillors and was discovered that three of the councillors did not acquit against their payments

amounting to K765,000 contrary to Regulation 94 of the Local Authorities (Financial)


In reply, the Council Secretary submitted that the Council had examined the books of account

and there was no proof that this money was paid to the councillors or re-deposited. This amount

would, therefore, be recovered from the Paying Officers emoluments.

Your Committee view this as a serious query and direct the Council to discipline the officerconcerned in order to deter such practices in future. They will await a progress report.

Non Preparation of Annual Financial Statements

30. It was discovered that the Council did not prepare its 2006 Annual Financial Statementwhich was contrary to Section 43 of theLocal Government Act, Cap 281 of the Laws of Zambia.

In reply, the Council Secretary reported that the Council was preparing receipts and payments asprovided for under Regulation 47 (1) of the Local Authorities (Financial) Regulations No.125 of

1992 but the Auditors recommendation to prepare a complete set of financial statements

including the balance sheet would only be achieved after the assets were valued by professional

valuation surveyors.

Your Committee resolve to await a progress report on the matter.

MPOROKOSO DISTRICT COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)for the Period 1 January to 31 December, 2006

Accounting System and Internal Controls

31. A review of the internal controls and the accounting system revealed that both were weak

resulting in the ineffective and inefficient operation of the Councils core business. The majorweakness was the absence of an internal auditor even though the position existed in the

establishment.

In reply, the Council Secretary informed your Committee that an Internal Auditor had been

employed and three officers in the accounts section had been oriented on how to run the accounts


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department by the Ministry of Local Government and Housing.

In noting the submission by the Council Secretary, your Committee resolve to give the Council

more time to implement the new internal controls. They direct the Ministry of Local Governmentand Housing to closely monitor the Council and provide a progress report to them.

Maintenance of Accounting Records

32. It was observed from the books of account that:

a) the cash book had not been ruled off for all the months;b) deposits and recorded collections had not marched due to weak controls on use of cash at

source;

c) the completeness and accuracy of the accounting records had been doubtful andquestionable due to multiple rubbing/ cancellations and corrections not signed for andoverwriting of figures; and

d) non maintenance of Goods Received Notes (GRNs) for all stock progressively hadcompromised the accounting system in stores.

In reply, the Council Secretary informed your Committee that in order to strengthen internal

controls and the accounting system the Council did not renew the contract of the former DistrictTreasurer and replaced him with the Internal Auditor who was among the three who had been

oriented by the Principal Local Government Auditor.

In noting the submission by the Council Secretary, your Committee resolve to give the Councilmore time to implement the new internal controls and maintenance of accounting records. Theydirect the Ministry of Local Government and Housing to closely monitor the Council and provide

a progress report to them.

Inter-Account Advances reconciled K3, 736,276.65

33. It was found that no ledgers had been maintained to ensure that the inter-account

advances amounting to K3,736,275.65 had been reconciled and accounted for.

In reply, the Council Secretary informed your Committee that the Chief Accountant paid

K3,000,000 to District Fund Account while the District Fund Account paid K736, 275.65 to

Mikomba Rest House bringing the total to K3, 736,276.65. All the inter-account ledgers andjournals had been prepared and the documents verified. As for the K736, 275.65 which was from

the District Fund to Mikomba Rest House, a ledger had been done.

Your Committee direct the Ministry of Local Government and Housing to have the matter

verified to ensure that the situation has been normalised.


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CHILUBI DISTRICT COUNCIL



Unretired Imprests: K3,232,000

34. It was revealed that K3,232,000 in respect of imprests had not been accounted for

contrary to Regulation 119 of the Local Authorities (Financial) Regulations No. 125 of 1992.

The Acting Council Secretary explained to your Committee that a sum of K 2, 400,000 had since

been recovered leaving a balance of K 832,000.

Your Committee direct the Acting Council Secretary to ensure that the remaining K 832,000 is

recovered and this be verified by the Ministry of Local Government and Housing.

Cash Book Maintenance

35. It was revealed that the closing balance for the year ended 31st December, 2005 ofK12,696,238.15, differed with the opening balance on 1 January, 2006 which was

K8,718,238.15. Worse still, the closing balance for December was written in pencil.

In response, the Acting Council Secretary noted that the entry had been made through journal

entry and had been written in indelible ink. Further, the officer was cautioned to be accurate andthe senior officer also was reviewing the cashbook regularly.

Your Committee view this as a very serious audit query as the use of pencil in books of accounts

is not only unprofessional but is often motivated by intention to defraud. They, therefore, directthe Ministry of Local Government and Housing to have the matterverified.

Unaccounted for Imprest: K7,000,000

36. A Council official by the name of E. Sikazwe was paid K25,500,000 on cheque 3 May,

2006 for sundry supplies of which only K18,500,000 was retired at the time of the audit, leaving a

balance of K7,000,000 still unretired. This was contrary to Regulation 119 of the LocalAuthorities (Financial) Regulations No. 125 of 1992.

In response, the Acting Council Secretary explained to your Committee that the Council had

written the officer to surrender the imprest of K 7, 000, 000.

Your Committee deplore the number of irregularities recorded by the Council, which is clear

indication of weak management at the Council. They direct the Acting Council Secretary to

ensure the money is recovered at once. They also direct the Ministry of Local Government and

Housing to place the Council under close supervision.


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MUNGWI DISTRICT COUNCIL

Statutory Audit Report and Audit Inspection Report and (Constituency Development

Funds) for the period 1 January, 2006 to 31 December, 2006

Funding and Utilisation Details of Malole Constituency Development Fund Account:

K28,550,000

37. It was observed that the Council had failed to account for funds totaling K28,550,000purportedly disbursed to cater for administration costs, water and electricity, footballs and

netballs and transport contrary to Regulation 86(1) of the Local Authorities (Financial)


In reply, the Acting Council Secretary submitted to your Committee that the Council had not yet

traced utilisation details in respect of the K28,550,000.

Your Committee are saddened by the Acting Council Secretarys response and direct the Ministry

of Local Government and Housing to ensure the matter is urgently resolved.

Missing Payment Vouchers: K1, 800,000

38. It was found that two (2) payment vouchers in respect of K1,800,000 were missing at the

time of audit contrary to Regulation 28 of the Local Authorities (Financial) Regulations No. 125

of 1992.

In response, the Acting Council Secretary informed your Committee that the Council was stilllooking for the missing payment vouchers.

Your Committee deplore the failure by the Council to locate the payment vouchers in questionwhich clearly indicates that the Council Secretary is not in control of accounting staff at the

Council. They direct that the missing payment vouchers be traced or the matter be reported to the

full Council for a resolution.

KASAMA MUNICIPAL COUNCIL

Audit Inspection Report on the Councils books of Accounts for the period 1 January, 2007

to 31 December, 2007

Irregular Expenditure of Government Expenditure without following Ministerial Guidelines:K395, 000,000

39. The Ministry of Local Government and Housing disbursed a grant amounting to

K395,000,000 to Kasama Municipal with a circular containing guidelines on the utilisation of the

said grant. According to the circular the purpose of the funds was to enable the Council meet

some of the operational costs such as servicing of vehicles and equipment, preparation ofvaluation rolls and provision of services. The Town Clerk reported a case of salary arrears to the

Establishment Committee which recommended that management be allowed to use K100,000,000

out of the K395,000,000 for payment of salary arrears. On 24 August, 2007 the receipt of the

grant in question was reported to the Finance Committee for their information. A full Council

meeting adopted the minutes of the Establishment and Finance Committees on 31 August, 2007.


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Meanwhile the Town Clerk had started spending the funds on 24 July, 2007 the day of receipt, on

the basis of a recommendation from the Establishment Committee whose resolution had not yetbeen adopted by Council. By 31 August, 2007 when the Council approved the expenditure the

Town Clerk had already spent K181,330,212, without Council approval.

In response, the Acting Town Clerk submitted to your Committee that this was an oversight onthe part of management at the time because it could have waited for guidelines from Ministry

Headquarters on the utilisation of the said grant. The Council had since retired the entire

management that incurred the irregular expenditure as a deterrent measure to officers who may befound to be wanting in future.

Your Committee resolve to give the new management at the Council more time in which to

improve the work culture. They direct the Ministry of Local Government and Housing to closely

supervise the Council and provide a report to your Committee.

Misapplication of funds for construction of market: K 16,233,000

40. The Town Clerk transferred K 25,000,000 from the salaries account to the

Chambeshi/Chikumanino market account for the construction of a market on 18 December, 2007.Upon trailing the funds up to 5 February, 2008 when it was completely utilised, it was discovered

that only K8,767,000 was used to procure pipes for the market ablution block while K16,233,000was misapplied on other expenditure.

An inspection of the Chambeshi market on 17 April, 2008 revealed that the Council had not yetfitted the pipes procured for the market. The pipes were bought on 5 February, 2008 at K8,

767,000 but by the date of inspection the pipes were still lying in stores because they did not havefunds to procure pockets of cement needed for the job.

In response, the Acting Town Clerk submitted to your Committee that management agreed withthe Auditor that the funds were utilised for other purposes. However, management had since

sourced funds internally to complete the project. The balance of K5, 619,515 was outstanding.

The pipes that were seen lying at the time of audit had since been fitted using other resources.

Your Committee resolve to await a report on the outstanding amount of K5, 619,515.

Project ledgers not maintained

41. The Council did not maintain project ledgers for projects such as market construction as

such funds for projects were easily diverted to other expenditure and progress monitoring was

difficult because of the absence of details of actual performance which would not be readilyavailable in ledger format.

In response, the Acting Town Clerk submitted to your Committee that the Council lacked

capacity to retain qualified staff and officers with no skills coordinated the functions of the

Finance Department. The Council had since filled some of the vacant positions with qualified

staff in the finance department. The project ledgers had since been written.

Your Committee disagree with the Acting Town Clerks view that preparation and maintenance

of project ledgers required the skills of highly qualified personnel. As a matter of fact, project

ledgers are not prepared by management but by junior staff. They urge the Ministry of Local

Government and Housing to closely monitor the Council and ensure compliance with regulations


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on the matter. They await a report on the matter.

Failure to Maintain Expenditure Ledgers

42. The Council did not maintain expenditure ledgers for the whole year. The effect was that

the financial reports could be misstated and the values reported could not be trailed to the booksof prime entry.

In response, the Acting Town Clerk submitted to your Committee that the coding system that wasconsistent with the budget was not followed such that expenditure that was meant for service

provision was spread across the various votes. The Finance Department had been staffed with

qualified personnel who were now doing the books of account to enhance the accounting system

and internal controls. An internal audit section had been established to ensure compliance.

As in the case of the above query, your Committee disagree with the Acting Town Clerks view

that preparation and maintenance of project ledgers required the skills of highly qualifiedpersonnel. As a matter of fact, project ledgers are not prepared by management but by junior

staff. They urge the Ministry of Local Government and Housing to closely monitor the Council

and ensure compliance with regulations on the matter. They await a report on the matter.

Non maintenance of Internal Audit function

43. The Council did not maintain an internal audit section contrary to Regulation 25 of the

Local Authorities (Financial) Regulations No. 125 of 1992.

In response, the Acting Town Clerk submitted that the Council had established an internal auditsection. The Internal Auditor was producing weekly reports evaluating the internal controls. All

payment vouchers were validated on the day the cheque was paid.

In noting the efforts made by the Council, your Committee resolve to give the Council more time

to implement the internal controls in question. They direct the Ministry of Local Government

and Housing to closely monitor how the Council is instituting internal controls and provide a

progress report on the matter.

Payment of advances to Councillors

44. The Council paid advances to some councillors against their sitting allowances. The

practice was unlawful as the payments were not supported by any statutory provisions or

conditions of service as councillors were not full time employees.

In response, the Acting Town Clerk submitted to your Committee that management erred by

paying councillors sitting allowances in advance. The advances had been recovered through

subsequent meetings and allowances were only paid on the day of the meeting.

The verification report by the Auditor, however, indicated that though the concerned councillors

had been written to, the funds in question had not been recovered.

Your Committee urge the Acting Town Clerk to ensure that allowances that were wrongly paid

were recovered from the concerned councillors. They await a progress report on the matter.


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CHIENGE DISTRICT COUNCIL


for the Financial Year ended 31 December, 2006

Wrongful Award of Death on Duty Compensation: K42,992,980

45. A check on the payments of terminal benefits revealed that the Council paid the

administrator for the late Council employee James Chungu, a sum of K20,000,000 drawn oncheque No. 000176 dated 30 September, 2006 against the total terminal benefits of

K53,374,263.86. The computation of the total sum included a component of award of death on

duty compensation amounting to K42,992,980. The conditions of service provides for award of

death on duty compensation for the death of an employee connected to the performance of work.

However, the investigations revealed that the cause of death was not connected to the

performance of work although he died at work.

The Acting Council Secretary stated that the Council would oblige with the recommendation of

the Auditors to recover the K42,992,980 and the administrator had been informed accordingly.

Your Committee are of the view that the matter should be subjected to further investigations since

the officer died at work. They wish to be satisfied that the recommendation by the Auditor torecover the money from the deceaseds family was justified. They await a report from the

Ministry of Local Government and Housing.

Ineligible Claim of Talk-Time Allowances: K15,720,000

46. A check on allowances paid to senior officers during the period under review revealed

that the Council Chairperson, Principal and Chief Officers were paid K50,000 each per week astalk-time allowances. The examination further revealed that this came about as a result ofmanagements decision to convert the K60,000 monthly telephone allowances to K50,000 weekly

talk-time allowances. This action amounted to improvement in conditions of service by monetary

gain of K15,720,000 without authority from the Council.

In reply, the Acting Council Secretary informed your Committee that the Council had since

approved the talk-time allowance.

Your Committee are disappointed that management took the decision in question without

authority of the Council resulting in the loss of income to the Council. They direct the Acting

Council Secretary to ensure that the money that was paid before authority was granted is

recovered from the concerned officers. They also wish to be informed of the disciplinary actiontaken against the officers who took the illegal decision.

Unsupported Payments Vouchers: K11,550,000

47. An examination of payment vouchers revealed that a total sum of K11,550,000

comprising eight (8) transactions had no supporting documents contrary to Regulation 86(1) ofthe of Local Authorities (Financial) Regulations No. 125 of 1992.

In reply, the Acting Council Secretary informed your Committee that the Council had only

managed to attach supporting documents amounting to K1,000,000 leaving a balance of

K10,550,000.


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Your Committee are disappointed that the Council has not dealt with the query with the urgency

that it deserves. They direct the Acting Council Secretary to find the supporting documents inrespect of the balance of K10,550,000, without further delay and report progress.

Excess Expenditure- Supplies and Services: K1,428,010

48. The review of receipts and payments accounts disclosed an over expenditure of

K1,428,010 on the Supplies and Services Vote to the detriment of other items in the budget such

as Provision of Services Vote which enjoyed only 23% against budget provision which wascontrary to Regulation 9 of the Local Authorities (Financial) Regulations No. 125 of 1992.

In reply, the Acting Council Secretary informed your Committee that the Supplies and Services

Vote was reported to the Council by presenting supplementary estimate for consideration.

In line with financial regulations, your Committee urge the Acting Council Secretary to submit

the said supplementary estimates to the Minister of Local Government and Housing forconsideration and approval. They await a report on the matter.

Unaccounted for Materials: K10,275,000

49. A sum of K10,275,000 was drawn in favour of Bornface Sinzala as imprest on 8 July,2007 to enable him procure materials for rehabilitation of five (5) wells. However, there was no

bill of quantities nor quotations attached to establish what materials were being procured contrary

to Regulation 86(1) of the Local Authorities (Financial) Regulations No. 125 of 1992.

In reply, the Acting Council Secretary informed your Committee that the Council had presentedthe bill of quantities to the Auditor at verification.

In noting the submission, your Committee direct the Ministry of Local Government and Housingto carry out a verification of the materials that were procured and establish whether they were

delivered to the project sites.

KATETE DISTRICT COUNCIL


Accountable Documents not presented for Audit

50. A total of forty seven (47) accountable documents were not presented for audit contrary

to Regulation 28 of the Local Authorities (Financial) Regulations No. 125 of 1992.

In reply, the Council Secretary submitted that the Council had managed to find thirty three (33)

out of sixty four (64) missing accountable documents leaving a balance of thirty one (31).

Further, the Council had built a strong room in the stores office to avoid misplacing accountabledocuments.

Your Committee deplore the Councils failure to keep accountable documents in safe custody

which clearly indicated that the Council Secretary is not in full control of accounting staff. They

direct that the outstanding documents be traced without fail and a report be made to them.


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Outstanding Imprests K62, 701,175

51. The Council had not recovered outstanding imprests amounting to K62,701,175 contrary


In reply, the Council Secretary submitted that the Council had retired the sum of K12,266,200 ofthe outstanding imprests. A total of K9,209,400 was deducted from salaries while K26,540,900

was deducted from long service bonus. Further, K1,913,000 was recovered from repatriation.

The total recoveries being K37,663,300 leaving a balance of K12,341,075. The Council alsowrote off the sum of K430,000.

Your Committee resolve to await a report on the retirement of the remaining imprests of

K12,341,075.

Unrecovered Advances to Councillors K950,000

52. The Council paid a sum of K950,000 to three (3) councillors as advance although they

were not full time workers and no recoveries had been made.

In reply, the Council Secretary submitted that the three (3) persons in question were no longer

councillors and the Council was still making efforts to find their whereabouts so as to recover theoutstanding advances.

Your Committee note the submission and urge the Council to recover the money in question,without fail.

ZAMBEZI DISTRICT COUNCIL



Payments made without supporting documents amounting to K9, 979, 169

53. It was revealed that twenty one (21) payments amounting to K9,979,169 were not

adequately supported with relevant documents contrary to Regulation 98 of the Local Authorities(Financial) Regulation No. 125 of 1992.

The Council Secretary explained that some of the payment vouchers in question had no

supporting documents but were signed by the payees. This happened because a single paymentwas made to one person who acknowledged receipt by signing on the receiving part. All the

required information, including name of payee, national registration card number, address and the

signature were provided. All the supporting documents had been attached to all the payment

vouchers.

Your Committee direct the Council Secretary to ensure that the remaining vouchers are supportedand provide a progress report accordingly.


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NCHELENGE DISTRICT COUNCIL



Non Receipt of Funds from Leasing of Tractor:K60,000,000

54. A review of the minutes of the Council revealed that the Council via minute No.

C.606/12/2005 resolved to lease the Council Tractor to Mount Phim Enterprises. According tothe contract agreement entered into and signed on 27 May, 2005, Mount Phim Enterprises was to

pay a total of K4,000,000 broken down as, K3,500,000 for transport and K500,000 for wear and

tear per month, bringing the total outstanding to K60,000,000.

In response, the Council Secretary submitted to your Committee that the Council resolved to

commence legal proceedings against the Company in question to recover the debt. The Council

tried to sue at the Magistrates Court in Mansa but were advised to seek redress in the High Courtin Kitwe or Lusaka as the Magistrates Court could not handle cases involving the amount in

question. Your Committee heard that considering the costs involved in travelling to Lusaka or

Kitwe the Council decided to write off the debt. Further, the person who hired the tractorchanged residence from Mansa to Lusaka and the Council had failed to establish his exact

residence.

Your Committee disagree with the suggestion by the Council Secretary to write off the debt in

question. They are of the view that the Council has not done enough to recover the debt anddeplore this negative attitude by the Council. They direct the Council Secretary to step up efforts

to locate the debtor and recover the money. They wish to be availed with a progress report.

Misapplication of Grant: K120,000,000

55. An examination of grants remitted to the Council revealed that a sum of K120,000,000

which was received from the Ministry of Local Government and Housing with express

instructions that 70% should go towards service provision and 30% towards general

administration was misapplied. Management instead resolved to pay K103,000,000 towards

salary arrears which accounted for 86% of the total grant contrary to the guidelines.

In response, the Council Secretary submitted to your Committee that the Council wrote to theMinister of Local Government and Housing to seek ratification of the expenditure and a response

was being awaited on the same.

Your Committee resolve to await the response from the Ministry of Local Government andHousing on the matter. They direct the Council Secretary to abide by laid down procedures, in

future.

Multiple issuance and non recovery of imprests: K 33,158,500

56. A check on special imprest to officers revealed that a total sum of K33, 158,500involving four (4) officers remained long outstanding. Further scrutiny revealed that subsequent

imprests were advanced to the officers despite the fact that they had outstanding amounts to their

names contrary to Regulations 115 (1) of the Local Authorities (Financial) Regulations No. 125

of 1992.


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In response, the Council Secretary submitted to your Committee that the correct amount of

outstanding imprest for the period under review was K15, 858,500 and not K33,158,500 as statedby the Auditor. The K17,300,000 was imprest outstanding for the year 2007 which was not under

review. Further, the Council resolved to start making recoveries from the affected officers at25% of their net salary/wage; starting, in the month of December, 2008. The Council also

resolved to write off the unretired imprest in respect of Ms Fridah Mtonga as the officer who wasonly seconded to the Council from by the Nchelenge District Community Development office

had since passed away. The Council had since made recoveries amounting to K11, 898,727.

In noting the submission by the Council Secretary, your Committee direct the Ministry of Local

Government and Housing to advise on the correct amount of the unretired imprest. They, further,

direct the Council Secretary to ensure the remaining imprest is recovered and report progress.

Payment made against cash collection: K25, 504,614.30

57. A total sum of K25, 504,614.30 from the total receipt of K28, 843,000 was used directlyfrom collections contrary to the Regulation 19 (1) of the Local Authorities Financial Regulation

No. 125 of 1992.

In response, the Council Secretary submitted to your Committee that the Council had noted the

advice from the Auditor and would in future take action against such officers. Further, theTreasury Department was being encouraged to follow financial regulations strictly.

Your Committee, in noting the submission by the Council Secretary, direct that to strengthenaccountability and promote transparency in the management of Council funds, action should be

taken against officers who facilitated the cash transactions in question.

They await a report on the matter.

Poor Payroll Management: K8, 000,000

58. The assessment of payroll management revealed that management did not keep or

maintain a reliable and transparent payroll records amongst other payments during the year. It

was discovered that a total of K8,000,000 cash payment comprising seven payment vouchers to

seven staff members was paid purportedly against nine (9) months salary/wage arrears.

In response, the Council Secretary submitted to your Committee that the advice was noted and the

Council had opened salaries/wage ledger accounts for all staff members which were being

updated on the monthly basis. Further, management had opened a salaries/wage account with

NATSAVE bank where money was deposited to allow it accumulate to pay salary/wage in full.

In noting the submission, your Committee wish to satisfy themselves that the Auditors advice

has been complied with in full. They direct the Ministry of Local Government and Housing to

ensure that the current status is verified.

Misapplication of Market Grant: K20,000,000

59. An examination of specific grants to the Council from the Ministry of Local Government

and Housing revealed that a grant amounting to K20,000,000 receipted on General Receipt No.

19836 on 16th September, 2006 was misapplied.


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In response, the Council Secretary submitted to your Committee that it was not the whole

K20,000,000 that was misapplied. It was only K7, 574,775 broken down as K5,000,000 directtransfer to the District Fund Account and K2,574,775 paid to a former Council Secretary. So far

K2, 000,000 had been re-imbursed to the Market Fund Account while the balance would be paidback in installments of K1, 000,000 per month effective from July, 2009.

Your Committee direct the Council Secretary to pay back the money at once and provide an

update on the matter.

LUSAKA CITY COUNCIL

Statutory Audit Report for the period year ended 31 December, 2001 to 31 December, 2005

Strategic Plan

60. A review of the strategic plan for the period 1999 to 2004 revealed that the last strategic

plan of the Lusaka City Council lapsed in 2004 and it had never been revised.

In reply, the Town Clerk explained to your Committee that the process of reviewing the strategic

plan for the period 1999 to 2004 started in 2007 which culminated in the development of astrategic plan for the period 2009 to 2013 which was in draft form.

Your Committee view this as a very serious query as it is a clear indication that the Council isoperating without a clear vision which could be followed and monitored by all stakeholders.

They urge the Council to ensure that the said plan is completed and approved without furtherdelay and provide a progress report on the matter.

Lack of an Integrated Accounting System

61. The Council did not have an integrated accounting system that ensured that all Council

activities and transactions were accounted for properly. The accounting arrangement comprised a

combination of stand alone manual ledgers, registers and microsoft excel spreadsheets.

In reply, the Town Clerk informed your Committee that the Lusaka City Council had procured a

pastel accounting system in the year 2007. The package included payables, receivable, fixedassets and inventory. He noted that the said system was running on an independent domain on

the Lusaka City Council Area Network. The system was, however, only being implemented by a

selected number of accountants. The chart of accounts had been established in the system and the

integration was in the process. Data capture was also in the process.

In noting the progress recorded by the Council, your Committee urge the Town Clerk to ensure

that the accounting system at the Council is completely integrated and provide a progress report.

Retention of Records

62. It was observed that there was no effective records management and control. The

number of missing documents which were required for the audit indicated that there was no

documentation management and retention policy employed by the Council.

The Town Clerk informed your Committee that there was a filling system in place which was


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convenient for the Council and therefore did not understand what was being recommended by

the Auditors.

In noting the submission, your Committee direct the Ministry of Local Government andHousing to verify the matter and clarify to the Council what the Auditors were recommending.

They await a progress report.

Outdated Valuation Roll

63. The Council did not make adequate budgetary provisions to ensure that valuation rolls

and supplementary rolls were prepared in a timely manner to ensure that rateable values reflected

fair values of the properties.

The Town Clerk responded that the Council agreed with the Auditors view on the need to update

the current valuation roll. Currently the Council was conducting a main valuation roll. It was

estimated that the revaluation exercise would end by August 2009.

Your Committee resolve to await a progress report on the matter.

Ground Rent System

64. The Council implemented a new system in August 2004 to deal with matters relating toground rent income and debtors. The system had not been fully updated. The migration of the

ground rent system to the oracle system had only been in November, 2005 and most properties

had not yet been migrated.

In reply, the Town Clerk explained that the properties which were not migrated from the oldplatform to the new platform, did not meet the requirements of the new system which meant that

some mandatory information on these properties was missing such as name of property ownerand the National Registration Card number. The updating of the new platform was a continuousprocess.

In agreeing with the Town Clerk that the process is on-going, your Committee urge the Council

to step up the process of transferring data from the old system to the new one. They wish to

receive a progress report on the matter.

Fragmented usage of information technology

65. It was noted that the usage of information technology in the Council was fragmented with

IT only being used in limited areas of the Council.

The Town Clerk submitted that the Councils cash inflow could not allow maximum provision of

IT infrastructure to all members of staff. Despite the given financial situation, the Council had

just completed the upgrading of the Local Area Network (LAN) spanning across the entire Civic

Center Building including peri-urban offices. This would enable the extension of all

computerised systems to all relevant users in the Council. At the same time, the Council had

embarked on a project to extend its computerised system to all the peri-urban site offices througha Wide Area Network (WAN). This could also be appreciated through the provision of the pastel

system to the Accountants.

While recognising the work the Council is doing, your Committee resolve to await a progress

report on the full operationalisation of the information technology.


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Fixed Assets Management

66. The Council did not have a fixed assets policy. Accounting practice required that fixed

assets management should include all the necessary information required for easy verification andtracing of all fixed assets. The Council did not have a policy on disposal or replacements.

In reply, the Town Clerk informed your Committee that the Council did not have policy in place

on disposals and replacements of fixed assets but it was guided by the Local Government Act.

The cost benefit analysis undertaken revealed that the cost of hiring an external valuer was farmore than the proceeds realised from the sale of fixed assets. The Council had already engaged

the Government valuation department to undertake the valuation of fixed assets at a cost of K60

million. This cost would exceed the proceeds to be realised from the sale of fixed assets.

Your Committee are saddened by the Councils view that they do not need to have a specific

policy on the disposal and replacement of fixed assets and that the Local Government Actwas

adequate for the purpose. They direct the Ministry of Local Government and Housing to assistthe Council comprehend and implement what is being recommended by the Auditor.

Lack of Supporting Documentation

67. It was observed that there were missing supporting documentation including originalinvoices for the majority of additions to fixed assets for the period under review in respect of

ABA 6809, AAX 4349, Ibex Hill Housing and furniture and fittings.

In reply, the Town Clerk explained that the documentation pertaining to the properties in question

were still being looked for.

In noting the submission by the Town Clerk, your Committee direct him to find the documents inquestion and have them verified my the Ministry of Local Government and Housing.

The Council owned Properties not on the Title

68. It was reviewed that most Council owned properties did not have certificates of title such

as Civic Center, Chelston Shopping Complex, Northmead Shopping Center, Kabwata Sports

Complex, Sheki Sheki Warehouse and offices and 10 Ibex Hill Houses.

In reply, the Town Clerk explained that while it was correct that the Chelston Shopping Complex

and the Ibex Hills houses were not on title, the Civic Center and Northmead shopping complex

had title. Further, the Sheki Sheki warehouse and offices were sold off.

Your Committee deplore the queries regarding inadequate documentation for Council properties

which is a clear indication that the Town Clerk is not in full control of the staff handling legal

issues. They direct the Town Clerk to ensure that all Council properties are put on title without

delay.

Containers Debtors position

69. The debtors position on levies for containers in various parts of the City were

significantly overstated. The confirmations to the business that operated from containers

indicated that most of these containers were non-existent. The Council had continued to accrue


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this income despite not having a comprehensive and confirmed database on the containers

operated in various parts of the city.

In reply, the Town Clerk stated that the Council took note of the recommendations maderegarding containers debtors position and thought that further verification was needed upon which

recommendation, the Council would write off those that were non-existent.

Your Committee note the submission and resolve to await a progress report.

Outstanding PAYE

70. The Council had not in the five years under review (2001-2005) remitted to Zambia

Revenue Authority (ZRA), PAYE deducted from the Payroll. The extent of the liability in the

books of the Council was K11, 511,336,206.55 as at 2005.

In reply, the Town Clerk noted that the observation was correct, as no remittance had been madeto ZRA due to financial constraints.

Your Committee sympathise with the position the Council has found themselves in but aredisappointed that the Council has not shown any determination to correct the situation. They

direct the Council to explore innovative ways of dealing with the matter, including entering intodebt swap arrangements with the concerned institution. They resolve to await a report on the

matter.

Stock Management

71. There was no robust stock management system that monitored consumption by each cost

center, condition of stock and age of stocks and audit trail for stocks transferred to outlyingregional offices. No stock-taking was undertaken in the stores department to determine the levelof stocks and condition.

In reply, the Town Clerk explained that the stores management system was developed in-house in

2007 to capture both stock and non-stock items. The system had attributes set out below.

Able to capture the suppliers registered with the Lusaka City Council; Creation of catalogue numbers for each and every item; Receiving stationary and hardware items purchased from suppliers with their total value; Issuing stores items and at the same time reducing stock quantities after each issuance; and Able to generate reports such as stores ledger, list of suppliers.The Town Clerk further submitted that the age stock was indicated in the annual stocking report.

Stocktaking was conducted every last week in the month of December with weekly stock counts

conducted as well.

Your Committee note that there is an apparent conflict in interpretation of what an ideal stock

management system is. They, therefore, direct the Ministry of Local Government and Housing to

assist the Council comprehend what is being recommended by the Auditors.


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Procurement Policy

72. It was observed that the Council did not have a procurement policy or manual in place.

Reliance was placed on the general procurement guidelines from the Tender Board. Theseguidelines set a general standard on procurement for all public institutions and were not specific

to the size of the operation of Lusaka City Council.

In response, the Town Clerk informed your Committee that the Councils procurement policy was

based on the Zambia Tender Board Act. The internal procurements policy formulated by Councilderived its contents from the Zambia Tender Board Act which was not superseded.

Your Committee note that this is another matter that requires the Ministry to assist the Council to

appreciate what is being recommended by the Auditors. They await a report on the matter.

Amounts on Vouchers not on Daily Expenditure analysis

73. A random sample of some of the available vouchers for 2005 revealed that an amount of

K119,240,213 appearing on sampled vouchers was not reflecting on the daily expenditure

analysis report contrary to Regulation 96 of the Local Authorities (Financial) Regulations No.125 of 1992.

In response, the Town Clerk explained that the observation was not correct as the daily

expenditure report represented the actual expenditure made on a particular day. The amounts

referred to in the management report were picked by the Auditors from purchase orders whichmay not have been paid on those particular days for them to appear on daily expenditure report.

Orders prepared at a particular time may be paid later depending on the availability of funds.Once paid, they were then captured onto the daily expenditure report on that particular day.

However, the Auditor, in his verification report, advised your Committee that the query still stoodas no documentation had been presented by the Council to address the concerns raised in the

audit.


verified by a different auditor. Your Committee await a report on the matter.

KITWE CITY COUNCIL

Statutory Audit Report for the period 1 January 2001 to 31 December, 2005

Cobol System

74. The cobol system which the Council was using for its billing and payroll purposes was

obsolete and was no longer effective for the maintenance of information. The system was fraught

with considerable shortcomings in that data stored on the hard drive from the earlier years had to

be deleted and stored on floppy disks to create space on the hard drive for the processing ofinformation and data for the current years.

The Town Clerk informed your Committee that the Council was in the process of procuring a

modem accounting system in order to cope with the size of the billing requirements. The same

had been included in the Councils 2009 budget estimates at a cost of K500 million.


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Your Committee direct the Town Clerk to provide a progress report on the matter by the end of

December, 2009.

Accounting Controls and Records

75. The status of the accounting records for the three years under review was unsatisfactory.There was no formal record management policy in operation in the Council. Accounting records

were manually maintained and there were no proper laid down accounting and control procedures

that would have assisted a conducive and reliable processing and production of financialinformation. Supporting documentation were either mislaid or lost, a situation which had led to

the poor statement of affairs at the local authority.

The Town Clerk informed your Committee that the query was unfortunate and was as a result of a

prolonged strike action by unionised council employees in 2001 and part of 2002. However, the

requirements set by the financial regulations and other reporting standards always took

precedence in the daily processing of the transactions.


verified to ensure the situation has been normalised. They will await a report on the matter.

Quality of employees records

76. It was noted that there were some inconsistencies between employee information

maintained in the personnel section and establishment section which was responsible for thepayroll function contrary to Regulation 28(d) of the Local Authorities (Financial) Regulations

No. 125 of 1992.

In reply, the Town Clerk informed your Committee that in the interim the Council had startedimproving on the flow of documentation to the relevant sections that required such information.As a permanent solution, the Council was in the process of procuring payroll software that linked

personnel records to establishment section operations and the same had been included in the 2009

budget.

In noting the submission, your Committee wish to satisfy themselves that the situation has been

normalised before the query can be rested. They direct the Ministry of Local Government and

Housing to provide a progress report on the matter.

Maintenance of a Fixed Assets Register

77. The Council only maintained an asset register for motor vehicles. It had not constructeda comprehensive fixed assets register that encompassed leasehold land and buildings, motor

vehicles, plant and machinery, fixtures and fittings and furniture owned by the Council contrary


In reply, the Town Clerk informed your Committee that the motor vehicles asset register was

constantly updated except that it had not yet been computerised. The other fixed asset registerswere on listing level and a fixed asset module to computerise the same had been procured

although it needed upgrading.

Your Committee, in noting the work being done by the Council, resolve to await an update on the

matter.


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Payment from daily cash collections: K88,684,850

78. A test check on the revenue cycle revealed that cash payments were made from daily

cash collections without authority from any of the standing regulations. The cash payments werecontrary to Regulations 89 (I) of the Local Authorities (Financial) Regulations No. 125 of 1992.

In reply, the Town Clerk informed your Committee that measures had been put in place to stop

the practice. The Council had introduced a K5 million weekly imprest system.

However, the Auditor reported to your Committee that although the imprest officer had been

identified, the imprest system was not yet operational.

Your Committee direct the Ministry of Local Government and Housing to have the matter re-

verified to ascertain the obtaining situation.

Standing Imprest limits

79. It was observed that the Council had no limits for the standing imprest. The operation of

standing imprest was not governed by subsidiary regulations to prescribe the value and nature ofpayments to be made from the imprest contrary to Regulation 113 of the Local Authorities

(Financial) Regulations No. 125 of 1992.

In reply, the Town Clerk informed your Committee that the Council had set a K5 million weekly

cash imprest from which certain payments could be made in order to safeguard the use of imprestand avoid cash payments from cash collections.

As in the above query, your Committee direct the Ministry of Local Government and Housing to

have the matter re-verified to ascertain the obtaining situation.

NDOLA CITY COUNCIL

Statutory Audit Report for the period 1 January, 2001 to 31 December, 2005

Pastel Accounting System

80. The Council was using the pastel accounting system for the processing of accounting

transactions. Only two staff in accountancy section were competent to use the pastel accounting

package. The inputting of income and payments transactions was not linked to the pastel

accounting system. The accounting system was not integrated. The billing system was doneusing oracle system, block figures of income and expenditure were done in pastel accounting

system while the management accounts were done using excel spreadsheet.

In reply, the Town Clerk informed your Committee that the pastel provider, Classics Computer,

had trained staff on the use of pastel accounting for a duration of two weeks. The limitation of

the oracle system was integrating with the pastel accounting package. The Council had opted tomigrate to the palmsoft accounting package which had a revenue and payments integrated system.

The Council had planned to implement this by December, 2009.

While noting what the Council was doing to address the Auditors recommendations, your

Committee resolve to await a progress report on the matter.


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Revaluation and disposal of Assets

81. The Council made revaluations of assets with no supporting documentation on how the

figures were arrived at. In 2001, motor vehicles were revalued at K1,299,328,000. Further in2002, land and buildings were revalued at K2,621,225,000 without a valuation report to support

the figure. While in 2003, the Council disposed of 9 motor vehicles at the cost of K85,449,000without following the laid down procedures in accordance with the Local Government Act CAP

281 of the laws of Zambia. The Council did not obtain a valuation of the motor vehicles from the

department responsible for valuation of property or a valuer approved by the Minister before saleof any Council assets.

In reply, the Town Clerk informed your Committee that the current stock taking exercise on fixed

assets would enable Council to determine the adjustable value in the 2005 financial statements.

Your Committee observe that this is an important audit query and resolve to await a progress

report on the matter.

Maintenance of Payables Ledger

82. It was observed that payables ledgers for various suppliers were not maintained. Further

the ledgers were not updated for payments on outstanding balances and goods and servicesreceived. For instance, important details of goods and/or services received as well as cheque

numbers for payments were not recorded in the ledger. Amounts included as payables balances

were obtained from the last payment vouchers for the years under review.

In reply, the Town Clerk informed your Committee that a migration to the palmsoft accountingpackage would enhance the system of maintenance of the payable ledgers because payments

would be generated through the computerised system.

In noting the submission, your Committee direct the Ministry of Local Government and Housing

to verify the matter and establish what the current practice is.

NAKONDE DISTRICT COUNCIL

Statutory Audit Report and Audit Inspection Report (Constituency Development Funds)for the Period 1 January, 2006 to 31 December, 2006.

Irregular Payment of Board Allowances to a Councillor for attending Board Meetings: K950,

000

83. It was discovered that a councillor nominated to sit on the District Education Board had

received sitting allowances amounting to K950,000 from the Council instead of the District

Educations Board contrary to Regulation 97 of the Local Authorities (Financial) Regulations No.

125 of 1992.

In response, the Council Secretary explained to your Committee that the Council regretted the

oversight and had since replaced the named councillor with another one who resided within

Nakonde to avoid such similar payment of allowances. However, the councillor in question was

no longer a member of the Council, making it difficult for the Council to recover the monies.


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In noting the action taken by the Council, your Committee urge the Council to subject the matter

to a Council resolution for a decision. Your Committee resolve to await a progress report.

Advance not recovered from Kabompo District Council Secretary: K 400,000

84. It was discovered that the Council advanced a sum of K400,000 to the Council Secretaryfor Kabompo District Council but there was no documentary proof to the effect that the advance

had been repaid.

In reply, the Council Secretary noted that a follow up had been made and the statement of account

to remind the said officer had been written and sent.

Your Committee urge the Council to ensure the said amount is recovered without fail. They

await a progress report on the matter.

Unjustified Payments of Subsistence Allowances to Councillors: K3,880,500

85. It was discovered during audit that councillors claimed five (5) nights each as subsistence

allowance twice in the same day for one (1) meeting. This was not only irregular but tantamountto misappropriation and contrary to Order No. 14 of 2006 on the councillors allowances.

The Council Secretary reported that this was as a result of a postponement of the meeting.

Otherwise the management gave advice on this matter and would ensure that such an omission

did not recur.

In noting the submission, your Committee urge the Council to ensure that the payments that werewrongly made were reversed by recovering the same from the concerned councillors. They

resolve to await a report from the Ministry of Local Government and Housing on the matter.

LUWINGU DISTRICT COUNCIL


Anomalies of Recorded Information in the Accounting Records

86. It was observed from the books of accounts that there was no justification why

management had failed to update the valuation roll.

In reply, the Council Secretary informed your Committee that management had failed to update

the valuation roll because the exercise was too costly and the Council lacked capacity in terms of

funds to implement it. However, the Council had managed to solicit for funds from the Irish Aid

and Constituency Development Fund and some properties had already been surveyed and the

Council had appointed Government valuers for the exercise.

Your Committee resolve to await a report on the matter.

Unaccounted for Cash Balances or Partially Retired Imprests not recovered

87. It was noted that all cash balances in the sums of K21,441,940 and K15,977,070 from


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partially retired imprests for Isandulula and Chulungoma Rest Houses respectively had not been

recovered and accounted for contrary to Regulations 119 of the Local Authorities (Financial)Regulations No.125 of 1992.

The Council Secretary informed your Committee that management had made a follow up on the

matter and most of the imprests had been retired and recoveries had been effected from officerswith outstanding imprests. For those imprest holders that had been dismissed or had resigned,

management had recommended to the Council to write off the im